Home Capital completes final tranche of mortgage assets sale

Firm seeks to stabilize its liquidity position

Home Capital completes final tranche of mortgage assets sale

Home Capital announced on Thursday the completion of the final tranche of its commercial mortgage asset sale to private equity firm KingSett Capital, about two months after first announcing the deal.

The lender has received an aggregate amount of approximately $1.2 billion on the sale and discharges of commercial mortgages, in connection with its initiatives to increase liquidity. KingSett invests through its growth, income and mortgage funds and owns interests in assets worth over $10 billion.

When the deal was first announced, then-interim president and CEO Bonita Then said it would help the company stabilize its liquidity position. She also said the transaction highlights the “flexibility and options” created by the quality of Home Capital’s assets.

“Proceeds from the transaction are expected to have an immediate impact by enabling us to enhance our liquidity and reduce the outstanding debt under the Company’s $2 billion credit facility,” she added.

These developments tie into the channel lender’s attempts to stabilize itself in the wake of rapidly depleting deposits and allegations from the Ontario Securities Commission that it misled investors in 2015.

Under the terms of the agreement, KingSett will purchase the portfolio for 99.61% of outstanding principal value, less a share of future credit losses. The transaction closed on schedule, as the June announcement said the last tranche will be completed by the third quarter of 2017.

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